Creating a Post-Crisis Economy: Moving Beyond Consumption

For the next few days I plan to explore what I am calling the Age of Involvement: the role of participation in an information society and how it leads to an expanded view of our economy. I am not an economist and have never studied economics. I am approaching this as someone who believes that innovation is redefining everything around us, including the ways that we measure human achievement. For those who do understand economics I apologize for the inevitable naiveties represented here but I hope there is enough of interest to stimulate a conversation.

I have been thinking quite a bit recently about the failure of the economy and whether we want it to recover to its pre-bust state. As I listened to the arguments for various stimulus packages, the main justification for distributing hundreds of billions of dollars seemed mostly to involve getting us to spend more by consuming more. As a short term fix this may be okay, but wasn't it just such an unsustainable approach to growth and consumption that got us into trouble in the first place? Can we really expect to spend our way out of this downturn and somehow magically create a post-crisis economy that is sustainable?

If the financial crisis was caused by the over-consumption of things we couldn't afford (cheap mortgages, for instance), and the environmental crisis is being caused by the over-consumption of things we can't afford (the earth's resources, for one), and the health crisis is being caused by the over-consumption of things we can't afford (calories, for example), then all signs point toward our having a bit of a problem with endless consumption.

So what's the alternative?

I think one problem is that our economy is too simple in what it measures. Industrialization created an economy that converts raw materials into goods that are sold for cash. Our GDP measures the worth of the goods and services we produce each year, and growth is dependent on both creating more, and doing it more efficiently. This may be appropriate when manufacturing physical products was the majority of humanity's value-adding activity, which was the case for the first 150 years of the industrial revolution. But it is not the case anymore. Whether it is reputations created through brands, relationships created through services, ideas created through knowledge, or access created through networks, many more forms of value are now created in our modern information society. And yet, our economy does not measure those in any meaningful way. If it did might we find that growth through consumption of resources was, in fact, being replaced by growth through participation in networks, relationships and experiences?

Take the music industry as an example. Measured the conventional way, the music economy has seen a massive destruction of value in the last ten years through the emergence of digital downloads and the Internet. Put simply, the record companies are selling far fewer CDs. If, however, we were to look at the industry differently, might we find a different answer? If we could value the increase in the amount of music being listened to, or the social connections that sharing music creates, or the increase in the number of music creators, or the meaning that an individual gets from creating his own music, would we find that instead of the destruction of value we had instead experienced a significant creation of value?

We tend to get more of what we measure. If we measure consumption, we will get more of it. If we measure participation, we will get more of that—and we might just find we are already far wealthier than we realize. Or, perhaps, learn that we’re far poorer. More importantly, if our economy measured different types of value, we could focus on designing things that created growth without automatically requiring that we consume more stuff.

(This post is adapted from one first published on my blog design thinking.)

Editor's note: Tim Brown is the CEO and president of IDEO, and a thought leader on the subject of design thinking. He's also an industrial designer himself, and has exhibited at the Museum of Modern Art in New York, and the Design Museum in London. He's particularly interested in the convergence of technology and the arts, and how design can have a social impact, particularly in emerging economies.

His talk on "Serious Play" can be seen on TED.com and his article on design thinking for The Harvard Business Review is available here. Brown's new book, Change By Design, on how design thinking transforms organizations, will be released by HarperBusiness in September 2009.